Interview with Murad Bayar, Undersecretary for Defence Industries, Turkey

06:41 GMT, July 6, 2009 Defence Turkey: What do you think about the year 2008 when important steps were taken in the defence industry? What level of success has our defence industry achieved in respect to production based upon exports, when taking the numerical values of 2008 into consideration? What is the situation in reaching the 2010 goals in the context of meeting 50% of Turkish Armed Forces’ needs with original designs from national sources?

Bayar: One of the most important goals about Industry and Technology Management, as outlined in the 2007-2011 Strategic Plan, is to reach the 50 per cent level of domestically produced designs as required by the Turkish Armed Forces. With the purpose of clarifying the roadmap to achieve this goal, the “Defence Industry Strategy Document” has recently been published. This document defines and explains the tasks of the sector in details about land, naval, air and related platforms. With the help of this document, we believe that the awareness of local firms on the processes in their sectors will be increased. Moreover, to make this document a vital tool, continual controls and updates of the tasks will be efficiently performed.

For supporting the design of new products and providing a larger share of the work to local SMEs, some changes have been made to the evaluation formula of the Industrial Participation/Offset under the defence procurement projects, in accordance with “Defence Industry Strategy Document”. Upon applying these changes to the projects, we believe that the main Turkish contractors will be able to concentrate more on system design and integration processes. An additional positive outcome of these changes is expected to be the increasing number of SMEs working in the defence industry and the stabilization of these companies.

In this regard, in addition to the above mentioned activities, local industry is given considerable support by SSM in order to gain certain critical technologies. Conferences, workshops and seminars are organized regularly to notify these companies about up-to-date developments in the sector. At the same time, the Defence Industry Manufacturers Association (SASAD) is also arranging similar informational sessions for defence sector companies. Consequently, we expect that the additional capabilities gained by local industry with the help of our support will eventually increase the share of work of local industry.

On the other hand, we also have to consider the capabilities of our universities in the procurement projects. As we would like our industry to design and produce our indigenous defence products in the near future, the cooperation between universities and companies, especially those having design centres, is essential. Therefore, establishing “Excellence Centres” is of primary importance and we have been spending a great deal of effort to create such centres.


Defence Turkey: Could you tell us about 2009 performance plan of SSM?

Bayar: The purpose of Code 5018 is to regulate the structure and functioning of public financial management, the preparation and implementation of the public budgets, the accounting and reporting of all financial transactions, and financial control in line with the politics and objectives covered in the development plans and programs in order to ensure the effective, economic and efficient collection and utilization of public resources as well as accountability and fiscal transparency.
SSM is one of the leading public administrations that took the initiative and prepared the 2007-2011 Strategic Plan in a cooperative manner to form mission, vision, strategic goals and measurable objectives.

Since 2006, we have been preparing annual budgets on a performance basis and in accordance with the corporate mission, vision, strategic goals and objectives included in the Strategic Plan. The 2009 performance plan is the fourth annual budget created on the performance basis with the budget estimations of the next two years by considering the 2007-2011 Strategic Plan. To ensure accountability and transparency, the annual performance program and performance reports are published on the SSM website.
I could say that the SSM gained significant experience in performance-based budgeting, but still there are areas that need to be developed, such as activity-based costing.


Defence Turkey: Could you tell us about recent situation and the coming process planned for 2009 in the ATAK and the National Tank Project?

Bayar: The ATAK Program is now in its System Requirement Review (SRR) phase. After defining the requirements, it will concentrate on the preliminary design. It is planned to have initial flight tests in order to test the engine modifications before the end of the year.

The Undersecretariat for the Defence Industries of Turkey (SSM) has contracted with Otokar for the design, development, integration, prototype production, testing, and qualification of first National Main Battle Tank of Turkey on July 29, 2008. Afterwards, the Project Implementation Schedule will come into force on January 15, 2009. In Altay Project, the South Korean Company, Hyundai Rotem, was chosen as the technical support and assistance provider.

Furthermore, within the scope of the Altay Project, Aselsan, Roketsan and Mkek are responsible for creating the Tank Fire Control System, C3I System, Armour System and Main Gun, respectively.
As for the recent situation of the Altay Project, the Conceptual Design Stage has been started with the commencement of the Project Implementation Schedule and has planned to proceed for 15 months.


Defence Turkey: There are improvements on the naval platforms with the projects of National Ship, Coast Guard Search and Rescue Ship, and Modern Patrol Boat. Could you tell us the recent progress of these projects?

Bayar: The scope of the Milgem (National Ship) Project consists of the construction of 12 (4 optional) Patrol and Anti-Submarine Warfare Ships through local design, the first ship, Heybeliada, was launched on September 27, 2008 (470. Anniversary of Preveze Naval Battle Victory and Turkish Naval Forces Day) at the Istanbul Naval Shipyard and also the keel of the second ship, Büyükada, was laid on the same day.

Heybeliada – the first locally designed corvette – has been designed and constructed by the Istanbul Naval Shipyard with the participation of local industry through the material, equipment and services supplied by the Undersecretariat for Defence Industries. In this respect, the hull appendages and form optimization and model trials of the ship were performed by Istanbul Technical University, the design documents have been examined by Turkish Lloyd according to the Rules of Naval Ships (2004) and the platform construction and outfitting equipment have been produced and integrated by local sub-contractors.

In the scope of the Coast Guard Search and Rescue Vessel Project, that consists of the acquisition of four Search and Rescue Vessels by RMK Marine - a private Turkish shipyard, the contract with RMK Marine became effective on June 30, 2008 and the construction of the first Vessel began on March 3, 2009.

A contract for a new type of Patrol Boat has been signed between SSM and Dearsan A. ?. on August 23, 2007 for the acquisition of 16 New Type Patrol Boats for the Turkish Navy. Hull construction of the First boat, up to the main deck, has been completed. Steel hull production of the Second and Third boats are ongoing. Factory Acceptance Tests for the systems and the hull for the First boat and FATs for the hull of the Second and the Third boats are still ongoing.


Defence Turkey: In 2008 it was decided to initiate contract negotiations with German Howaldswerke-Deutsche Werft (HDW) GmbH and the Marine Force International LLP Consortium for the procurement of a new submarine project. What kind of cooperation is planned to be achieved? What could you say about the current situation and the forthcoming process?

Bayar: The project covers the construction of six New Type Submarines with air independent propulsion system. The submarines will be constructed at Gölcük Naval Shipyard with the participation of local industry and through the material packages to be supplied from the contractor.

The Request for Proposal was released on December 28, 2006 and revised on July 12, 2007. DCNS (France), HDW/MFI Business Partnership (Germany) and NAVANTIA S.A. (Spain) submitted their proposals as of November 12, 2007. The evaluation of the proposals was finalized and on July 22, 2008 the Defence Industry Executive Committee decided to initiate the contract negotiations first with the HDW-MFI Business Partnership. The contract negotiation, started on August 2008, is still on-going.

With the completion of the project, the infrastructure of the Gölcük Naval Shipyard will be improved and the shipyard will gain know-how and experience regarding the construction and outfitting of submarines with air independent propulsion system. Also, in scope of the project in which the participation of local industry at the maximum level is aimed, some of the systems and equipments to be integrated on the submarines will be produced and integrated by local subcontractors.

In case the contract is signed by HDW-MFI Business Partnership, the 214 Class submarines will be constructed by Gölcük Naval Shipyard through the design and material packages to be supplied from the Business Partnership. There will be an industry participation and offset at the level of 80%. In this perspective, the industry participation will be achieved through the production and integration of some systems and equipments by local subcontractors and the procurement of some infrastructure improvements from local sources.


Defence Turkey: When will the Turkish Frigate TF 2000 project be implemented and how are the studies in this subject going?

Bayar: For the TF-2000 Project, which consists of the acquisition of 4 Anti-Air Warfare Frigates that will provide survivability in the presence of aerial threat and also provide support to mission functions such as command control and communication, reconnaissance, early warning, surface warfare, anti-submarine warfare and electronic warfare, the studies to determine the project model is on-going.


Defence Turkey: Could you inform us about air defence programmes and projects? How will the process about these projects run and what is its goal?

Bayar: The evaluation of Aselsan’s proposal for Self Propelled Low Altitude Air Defence Gun System and 35 mm Fire Control Device Modernization and Procurement Project is underway. We will present the results in the upcoming Defence Industry Executive Committee.

Request for Proposals (RFP) were issued in September 2008 for Medium Altitude Air Defence Missile System (T-MALADMIS) and Low Altitude Air Defence Missile System (T-LALADMIS) Projects. Bidders Conference & Industry Day was held in SSM at March 9th - 10th, 2009. T-MALADMIS and T-LALADMIS proposals will be submitted to SSM by May 1st, 2009 and May 18th, 2009, respectively.

In order to develop our own low altitude air defence missile, we are planning to sign the Towed Low Altitude Air Defence Missile Project Contract with Roketsan soon. For the Long Range Air and Missile Defence System (T-LORAMIDS) Project, Request for Proposal (RFP) will be released in March 2009. We intend to make source selection for T-LALADMIS, T-MALADMIS, and T-LORAMIDS Projects in the first quarter of 2010.

We see these air defence missile programs being handled concurrently as a historic opportunity that can’t be missed to supplement existing infrastructure and capabilities in Turkey with the aim of developing our own air defence system.


Defence Turkey: Recently it was decided to start contract negotiations with Telespazio in the GOKTURK Reconnaissance Surveillance Satellite System Project. Could you please inform us about the upcoming process?

Bayar: In the scope of GÖKTÜRK Reconnaissance and Surveillance Satellite Project, the Defence Industries Executive Committee decided to start the contract negotiations with TELESPAZIO S.p.A on December 18, 2008. As per the decision of the Defence Industries Executive Committee, SSM started the negotiations with TELESPAZIO in January 2009 and it is planned to have the signature of the GÖKTÜRK Contract during the first half of 2009.


Defence Turkey: It is seen that the General Purpose Helicopter Procurement Project is one of the major Projects in Turkey’s 2009 agenda. Could you please enlighten us about the negotiations with Sikorsky and Agusta Westland on a production model based on the long period?

Bayar: The Defence Industry Executive Committee (DIEC) has cancelled the TSK Helicopter Program and authorized SSM to initiate the UH Program on the basis of establishing a long term business model with the Contractor on December 05, 2007.

The Bidder Evaluation Document (BED) was issued by SSM on January 31, 2008 to AgustaWestland (AW) and Sikorsky (SAC) to procure 84 helicopters for Turkish Land Forces, Turkish Navy, Turkish Air Forces, Turkish Gendarmerie, Director of General Forestry and TAI has been announced as the Main Contractor of UHP on July 15, 2008.

TAI has issued RFP to AW and SAC on August 01, 2008. The AW and SAC proposal was submitted to TAI on September 29, 2008. TAI submitted its proposal for UHP on November 24, 2008. With the participation of the National Police (20 helicopters) and Special Forces Command (11 helicopters) to UH Program, the first revision related to the RFP was issued on February 15, 2009 by TAI and TAI will submit the UH Program proposal to SSM on March 23, 2008.

By taking into consideration the volume of the UH Program with the procurement of 115 helicopters; selection of the powerful and reliable Utility Helicopter platform, which will be able to meet the needs for eight users for future twenty years, increase the local industry capability and global partnership with the selected company, are essentials of the Program.

TAI will be the Main Contractor of the UH Program and negotiations with AW and Sikorsky – as subcontractors - are based on:

* gaining development, modification, system integration and testing capabilities on the Helicopter;
* designating Turkish industry as sole/secondary/qualified source for the determined components on the Helicopter;
* setting up a final assembly line in Turkey;
* increasing the local industry capability;
* having product partnerships on a risk share basis;
* world markets agreeing on sales/logistics territories in the world.


Defence Turkey: Could you please tell us about the process and recent situation of the HERON unmanned aerial vehicle (UAV)?

Bayar: The first Heron UAV System is undergoing the testing and evaluation process.


Defence Turkey: As you said, the fact that the Turkish defence industry has made fast progress in recent areas has brought about the industry being competitive in international markets, too. The Turkish defence industry increased its export capacity and entered new markets in 2008. Could you explain to us about recent export activities?

Bayar: In order to increase defence industry exports, we have participated in three international defence fairs; namely SOFEX in Jordan, DSA in Malaysia and IDEAS in Pakistan. In 2009, we participated in the IDEX Fair last month in the United Arab Emirates and will participate in DSEI in UK.
We plan to visit various countries, along with Turkish defence industry companies, in order to increase cooperation with these countries in the defence industry as we did for Saudi Arabia and Yemen in January 2009. Our goal is to reach an annual amount of $1 billion for defence exports by the year 2011.


Defence Turkey: In this context, what do you think about the export level the Turkish defence industry has reached?

Bayar: In 1997, the export figure was about $138 million. As a result of our efforts and activities for cooperation and export along with the companies’ efforts, the defence export reached $350 million in 2006 and $420 million in 2007. This is satisfactory progress.


Defence Turkey: Is there any plan in your agenda to participate in international projects in 2009?

Bayar: Turkey attaches great importance to international collaboration in defence industries. SSM is an active participant in the AGS (Alliance Ground Surface) Programme aiming to meet an important capability need of NATO, which is transforming itself to the new and asymmetric threats of the 21st century. On the other hand, from the very beginning Turkey has been a major contributor to European defence cooperation. The A400M transport aircraft programme which aims to give Europe an autonomous capability in strategic air transport is a good example of Turkey’s commitment to European cooperation in this field. The JSF is another international project where SSM supports the indigenous firms’ contribution to the project. Considering Turkey’s long term defence and security policies, SSM has adopted a strategy toward laying down an internationally competitive, export-oriented defence industry in order for Turkey to be a leading participant in international cooperation either within NATO or Europe.